REAL ESTATE (REGULATION AND DEVELOPMENT)ACT,2016

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PREPARED AND PRESENTED BY:GHIYA & COMPANY

FCA SANJAY GHIYA (DISA,CCA)

ghiyaandco@yahoo.co.in

GHIYA & CO.1

INTRODUCTIONRERA , 2016

✓ Real Estate Regulation and Development Act has come in forcefrom 1st May, 2017.

✓ The need of this act is to provide :

1. Regulatory authority to govern the real estate sector .

2. Transparency in the real estate sector .

3. Standardization and professionalism in the real estatesector in India.

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IMPLEMENTATION STATUS OF RERA

• 31 States/UTs have notified rules under RERA;

• 30 States/UTs have set up Real Estate Regulatory Authority (Regular - 24, Interim - 06)

• 51,809 Real Estate Projects and 40,463 Real Estate Agents have registered under RERA across the country.

• 46,152 Complaints have been disposed-off by the Real Estate Regulatory Authorities across the country.

• West Bengal has enacted its own Act namely 'West Bengal Housing Industry Regulation Act, 2017' however, state has been advised by MoHUA to notify the rules under Real Estate (Regulation & Development) Act, 2016.

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MEANING OF REAL ESTATE PROJECT

REAL ESTATE PROJECT

DEVELOPMENT OF BUILDING

THAT INCLUDES APARTMENT

INCLUDES RESIDENTIAL ,COMMERCIAL PROJECT,

SHOP,OFFICE ETC

CONVERTING AN EXISTING BUILDING OR

PART THEREOF INTO APARTMENT

DEVELOPMENT OF LAND INTO PLOTS

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MANDATORY REGISTRATION OF REAL ESTATE PROJECTS

• The Act deals with registration of real estate projects and realestate agents.

• The promoter of real estate project has to compulsorily register itsproject with RERA before the launching of the project (advertising ,sale, Booking or invitation/offer of sale by whatever means ).

• In case the project has already commenced before the applicabilityof the Act but not received completion certificate , then promoterwas given 3 months to register the project with the regulatoryauthority from commencement of this Act.

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EXEMPTION FROM REGISTRATION

• Area of proposed land does not exceed 500 square meters ornumber of apartments to be constructed in the project does notexceed 8.

• Project where completion certificate has been obtained prior tothe commencement of the Act.

• Project for the purpose of renovation or repair or redevelopmentwhich do not involve marketing, advertising selling or newallotment of plot or building.

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AS PER RAJASTHAN RERA ONGOING PROJECT EXCLUDES (1 OF 2)

• Where common areas and facilities have been handed over to theassociation of allottees or the competent authority, as the casemay be, for maintenance.

• Where sale/lease deeds or possession letter of minimum sixtypercent of the apartments /houses/plots in the phase/project havebeen executed.

• Where all development works have been completed andcompletion certificate has been obtained from chartered engineerin practice as per prevalent Township Policy.

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• Where completion certificate has been obtained from thecompetent authority or where all development works have beencompleted and application has been filed with the competentauthority.

• Where development is done in phases then each phase shall beconsidered as a separate project and the phases which fulfill any ofthe above conditions shall be excluded.

• Where competent authorities/local bodies have started issuinglease deed for plots by organizing camps or otherwise in townshipschemes.

• Where services have been handed over to local authorities formaintenance or more than 50% of the development charges havebeen deposited to local authorities.

ONGOING PROJECT EXCLUDES(2 OF 2)

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GRANT,REFUSAL AND REVOCATION OF REGISTRATION

• On receipt of application for registration, the authority shall withina period of 30 days grant registration.

• Authority can reject the application for the reasons to be recordedin writing if such application is not as per the act and rules.

• If RERA doesn't grant registration, then file an appeal to REAT orfile writ petition to High court . Practicing CA or Cost Accountant orCS or Legal Practitioner can appear before RERA/REAT.

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DEPOSIT OF AMOUNT IN SEPARATE BANK ACCOUNT AND AUDIT OF ACCOUNTS

• Deposit 70% of the amount realized for real estate project inSeparate Scheduled bank account from time to time .

• Withdraw amount from separate bank account to cover cost ofproject only on percentage of completion basis after duecertification by Engineer, Architect and CA .

• Get accounts audited within 6 months from the end of thefinancial year by chartered accountant.

• The promoter not allowed to accept an amount greater than 10%of cost of apartment/plot/flat as an advance payment/applicationfees, if written agreement of sale is not registered.

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DETAILS TO BE PUBLISHED ON WEBSITE OF AUTHORITY(1 OF 5)

• Developer Profile (status of enterprise , promoter’s background i.e.educational qualification, work experience), name, address etc.

• Track record of the promoter incl. no. of year experience, no. ofongoing project, no. of completed project etc.

• Details of litigation in past 5 years in relation to real estate projectsdeveloped or being developed.

• Details of all litigation against any promoter/director which incl.FIR No., name of police station, case under which section, case dateand status.

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DETAILS TO BE PUBLISHED ON WEBSITE OF AUTHORITY (2 OF 5)

• Web link of developer and project website.

• Details of the project.

• Registered agents details.

• Financial details of Promoter.

• Details of separate bank A/c with name, branch name, IFSC code, bank account number and bank address.

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DETAILS TO BE PUBLISHED ON WEBSITE OF AUTHORITY (3 OF 5)

• Approvals such as:

i) NOC (Environmental clearance, Fire NOC, Permission for WaterSupply, Height clearance from AAI etc.)

ii) Authenticated copy of land use permission.

iii) Authenticated copy of the site plan or site map.

iv) Authenticated copy of Occupancy Certificate or CompletionCertificate etc.

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• Legal documents:

i) Performa of : application form, allotment letter, agreement for saleand conveyance deed.

ii) Details of encumbrances on the land on which development isproposed or no encumbrance certificate from advocate havingexperience of at least 3 years in land related matters.

iii) Sanction letter from banks (if any).

iv) Details of mortgage or charge etc.

DETAILS TO BE PUBLISHED ON WEBSITE OF AUTHORITY (4 OF 5)

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DETAILS TO BE PUBLISHED ON WEBSITE OF AUTHORITY (5 OF 5)

• Details of Real Estate Agent :

Registration number and period of validity, brief details of hisenterprise, particulars of registration as per status of the agent,authenticated copy of the PAN card, authenticated copy of theaddress proof of the place of business.

• Land Cost and Development Cost

• This list is illustrative.

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STRUCTURAL DEFECT

• The Act mandates that in case the allottee, within 5 years of date

of possession, notifies the builder of any defect in workmanship,

quality of construction ,quality or provision of services, the

promoter is bound to rectify such defect without any further

charges within 30 days. In case of failure on the part of promoter,

the allottee is entitled to claim relief under the act.

• There is no time limit for filing the claim for compensation by

allottees.

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ALTERATION/MODIFICATION & TRANSFER OF REAL ESTATE PROJECT

• No modification/alteration except minor changes can be donewithout prior permission of the 2/3rd of allottees.

• Minor addition or alteration excludes structural change includingan addition to the area or change in height, or the removal orcutting into of any wall or part of a wall etc.

• No transfer of real estate project to third party can take placebefore prior permission as mentioned in the law including writtenconsent of two third allottees.

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RIGHTS AND DUTIES OF ALLOTTEES (1 OF 3)

• Prior written consent of 2/3rd of the allottees is required in casethere is major alteration and addition in the layout plan, sanctionedplan and specifications of the buildings or the common areas withinthe project.

• Only 10% of the cost of the apartment, plot, or building shall beaccepted by the promoter before executing the agreement for sale.

• Allottees shall be entitled for any loss caused to him due todefective title of the land, and no such limitation is there for theclaiming of such compensation.

• Each Allottee shall be entitled for the completion and occupancycertificate. GHIYA & CO. 18

RIGHTS AND DUTIES OF ALLOTTEES(2 OF 3)

• The promoter is bound to execute the conveyance deed within thetime period provided in the local laws. If there are no local lawsgoverning the time period, the conveyance deed is required to beexecuted within a period of 3 month from the date of issue ofoccupancy certificate.

• In case of the defect in workmanship, quality or provision ofservice or other obligation the allottee can claim compensation ifsuch defect is not rectified within 30 days and the promoter’sliability is for 5 years.

• Allottee shall be entitled to know stage-wise time schedule ofcompletion of the project as well as provision for civic infrastructurelike water, sanitation and electricity .

• The allottee shall be liable to pay interest, which is SBI- MCLR+2%,for any delay in payment towards any amount or charges to bepaid. GHIYA & CO. 19

RIGHTS AND DUTIES OF ALLOTTEES (3 OF 3)

• Every allottee shall take physical possession of the apartment, plot orbuilding as the case may be, within a period of two months of theoccupancy certificate issued.

• The promoter shall not transfer or assign his majority rights andliabilities in respect of a real estate project to a third party withoutobtaining prior written consent from two-third of the allottees,excluding the promoter, and without the prior written approval of theAuthority.

• Where any person makes an advance or a deposit on the basis of theinformation contained in the notice advertisement or prospectus, oron the basis of any model apartment, plot or building, as the case maybe, and sustains any loss or damage by reason of any incorrect, falsestatement included therein, he shall be compensated by the promoter.

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OTHER RELEVANT PROVISIONS

• Compulsory Insurance of title of land & building and construction

of the project.

• Quarterly update of bookings and development of project within

15 days of that quarter.

• Promoter can not pay Interest, Penalty and Compensation to

allottee out of the 70% of amount realised and deposited in

separate bank account.

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APPEAL UNDER THE ACT

AGGRIEVED PARTY CAN FILE AN APPEAL WITHIN 60 DAYS FROM THE DATE OF RECIPT OF ORDER

AGGRIEVED PARTY CAN FILE AN APPEAL WITHIN 60 DAYS OF ORDER PASSED BY REAT

CONSUMER PROMOTER

REAL ESTATE REGULATORY

AUTHORITY(RERA)

REAL ESTATE APPELLATE

TRIBUNAL(REAT)

HIGH COURT

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1. Land Mark Judicial Pronouncements

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•NEELKAMAL REALTORS SUBURBAN PVT LTD AND ORS VS UNION OF INDIA

BOMBAY HIGH COURTDATED: 06.12.2017

•BIKRAM CHATTERJI & ORS VS UNION OF INDIA SUPREME COURT OF INDIA

DATED: 23.07.2019 ( Amarpali)

•POINERR URBAN LAND AND INFRASTRUCTURE LTD VS UNION OF INDIA

SUPREME COURT OF INDIADATED: 09.08.2019

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2. Validity of OLD ATS under RERA?

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• Whether Valid in TOTO or not???

• Bombay High Court in matter of Neelkamal Realtors V/s Unionof India held that old agreement valid.

• Haryana Tribunal in case of Mazic Eye Developer V/s YogeshTomer dated 17.12.2019 held that Old Agreement valid .

• If ATS one sided, not fully enforceable.

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3. Definition of On-going projects .

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• No Definition in Act.

• Various states defined the term on-going projects in the Rules.

• Dilution done by the states.

• Centre Govt has taken a strict view.

• To be settled in Upper Court.

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4. Unregistered projects under RERA ?

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• Unregistered projects covered under RERA as per some RERAAuthorities.

• Bombay High Court in matter of Mohd Zain Khan V/s MahaRERA alsoaffirmed the same but only for filing of complainants.

• Affirmed by Haryana Tribunal in order Omaxe Ltd V/s Arun Prabhadated 19.12.2019.

• Affirmed By Punjab Tribunal in order Silver City Construction Ltd V/sState of Punjab and ORS dated 24.07.2019.

• Rajasthan RERA in order of Saroj Devi V/s Berry Developers andInfrastructure dated 29.04.2019 held that complaint is notmaintainable in respect of unregistered projects.

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5. Extension of registration for period beyond one year.

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• Land owner treated as promoter in various states.

• Karnataka RERA issued specific circular to cover land owner aspromoter. Liability co-Terminus with JDA.

• In Rajasthan in matter of Shankuntala Narendra Singh ChauhanV/s Modest Infra Ltd , it was held that obligation to allotteesare only of promoter and not of landowner.

6. Land Owner as promoter .

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7. Long term Lease in RERA ?

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• Long term lease to be covered under RERA.

• Colour of agreement to be seen.

• Bombay High Court in matter of Lavasa Corporation Ltd & Ors V/s Jitendra Jagdish Tulsiani & Ors dated 07.08.2018 affirmed the same.

• Rental Agreements are not covered under RERA.

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8. Refund to be granted by whom ?

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• Difference of opinion who has power to grant refund.

• In Rajasthan RERA, in order Amit Kumar Lamba V/s Shekhar HomeDevelopers dated 23.04.2019, it was held that : By Authority: Section 14(1), 14(2),18(1) if refund and interest asked for and 19 (6) to 19(11)By adjudicating officer: Section 12, 14(3), 18(1) if compensation asked for ,18(2) and 18(3).

• Haryana Tribunal have barred authority to grant refund in matter of Vijay Pal Singh v/s Ansal Housing & Const Ltd dated 22-07-2019Matter pending at upper court.

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9. Land and Development Cost .

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• No uniformity in land and development cost among states.

• Central Govt. to bring more clarity and uniformity.

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10. 500 sq mtrs or 8 units or both ?

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• Ambiguity on applicability.

• Raj RERA: If one condition applicable then project liable to beregistered.

• Maharashtra Tribunal in matter of M/s Geetanjali AmanConstructions & Ors V/s Hrishikesh Ramesh & Ors held that bothconditions to be satisfied.

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11. IBC V/s RERA

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• In matter of Pioneer Urban Land & Infrastructure Ltd Vs. Union ofIndia & related matter dated 09.08.2019 before Hon’ble SC, it washeld that IBC to prevail over RERA in matter of conflict.

• In ordinance dated 28.12.2019 : The threshold limit for filing anapplication under IBC is a joint application by minimum of 100allottees or 10% of such allottees whichever is less.

• In notification dated 24.03.2020, limit to trigger IBC has increasedto Rs 1.00 cr.

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12. Whether Investor coveredunder definition of allottee ?

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13. Pre-requisite fees for filing appeal before Tribunal?

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14. Format of Certificates not proper.

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• Every state has own rules.

• Every State drafted different certificates

• There should be correlation and matching among the certificates.

• Certificates complicated and not in proper format.

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15. Planning at time of registration

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16. Special window fund for stalled projects.

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• Hon’ble Finance Minister announced a “Special Window” Fund. The total size of the same Rs 25,000 crore.

• The fund set up as a Category-II AIF (Alternate Investment Fund) registered with SEBI and would run professionally. SBI Capital Venture assigned.

• Funding to be done for the projects which meet following criteria:• Stalled for lack of adequate funds• Affordable and Middle Income Category• Net worth positive projects• RERA registered• Priority for projects very close to completion

• Only two projects financed till now others in pipeline.

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17. Stalled Projects

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18. Impact of Covid-19 (1/2)

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• Steep decline in the sales in the realty sector.

• Construction activity to a standstill. Delay in completion.

• Liquidity problem among the developers as the current allottee may alsodefer their pending instalments.

• Covid19 will be considered as a force majeure in RER Act. Force Majeureperiod may vary.

• Relaxation by various state authorities for compliances till 30.06.2020 likeMaharashtra.

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• Relaxations for real estate sector is also expected in RER Act as highlightedby Secretary Shri Durgesh Mishra Ji recently.

• Dispute in real estate in each and every case

• Prices will go down.

2/2

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THANKS

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PREPARED AND PRESENTED BY:GHIYA & COMPANY

FCA SANJAY GHIYA (DISA, CCA) ghiyaandco@yahoo.co.in

Mob.No-9351555671

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